The yen came under general pressure during the pre-Europe part of the Asian session today. The Japanese currency gave back some of the gains it saw over the last couple of days. USD-JPY and EUR-JPY lifted out of yesterday's lows, the former logging a peak of 113.57, up from yesterday's low at 112.86. EUR-JPY saw a similar price action, while AUD-JPY carved out a new five-month peak at 87.90. The AUD-JPY cross, widely seen as a proxy of the China economy and broadly global risk appetite, has been rallying quite strongly over the last week, and was particularly buoyed in the wake of Fed Yellen's dovish-leaving guidance at her Congressional testimonies, and by strong Chinese export data. AUD-USD, meanwhile, edged out a fresh four-month high at 0.7746. EUR-USD settled near the 1.1400 level, up on yesterday's 1.1370 low but remaining comfortably off the 14-month peak logged earlier in the week at 1.1489, despite news that ECB President Draghi will be speaking at this year's Jackson Hole Symposium (August 24th-25th), which invited speculation that he would use this venue to make a long-awaited announcement on policy tapering. Draghi had formerly used the same venue to prepare markets for quantitative easing. Sterling has remained underpinned, trading further into one-week high terrain versus both the dollar and euro.

[EUR, USD]EUR-USD settled near the 1.1400 level, up on yesterday's 1.1370 low but remaining comfortably off the 14-month peak logged earlier in the week at 1.1489, despite news that ECB President Draghi will be speaking at this year's Jackson Hole Symposium (August 24th-25th), which invited speculation that he would use this venue to make a long-awaited announcement on policy tapering. Draghi had formerly used the same venue to prepare markets for quantitative easing. Sterling has remained underpinned, trading further into one-week high terrain versus both the dollar and euro. We advise caution with regard to EUR-USD, with a notable divergence appearing between trend momentum indicators and price action (with the 14-day RSI, for instance, declining over the last week despite the pair logging fresh highs).
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[USD, JPY]The yen came under general pressure today, giving back some of the gains seen over the last couple of days. This saw USD-JPY and EUR-JPY lift out of yesterday's lows. USD-JPY logged a peak of 113.57, up from yesterday's low at 112.86. EUR-JPY saw a similar price action, while AUD-JPY carved out a new five-month peak at 87.90. The AUD-JPY cross, widely seen as a proxy of the China economy and broadly global risk appetite, has been rallying quiet strongly over the last week, and was particularly buoyed in the wake of Fed Yellen's dovish-leaving guidance during her Congressional testimonies and by strong Chinese export data. We have been and continue to advocating a bullish view of USD-JPY, based on the Fed's gradualist tightening path which is being easily digested by global equity markets.

[GBP, USD]Sterling has remained underpinned, trading further into one-week high terrain versus both the dollar and euro. Data this week showing a sharp rise in foreign visitors to the UK and an unexpected dip in the jobless rate to a 43-year low of 4.5% have helped give the pound some respite after a period of underperformance. BoE MPC member McCafferty, a long-term hawkish, also argued that the central bank needs to consider unwinding the QE program. Cable has logged a six-day peak at 1.2964. We advise caution. The June RICS UK house price measure, released yesterday, dove to a +7% balance from +17%, posting its weakest reading since the immediate wake of the Brexit vote last year, with respondents reporting political uncertainty and perceived Brexit risks as weighing on activity. This follows other data pointing to a slackening housing market, along with misses in production data and sub-forecast June PMI survey outcomes. We recommend selling into sterling gains, anticipating a prolonged period of underperformance as PM May's weak minority government navigates negotiations with the EU. Resistance in cable is marked by recent daily highs at 1.2974 and 1.2984.

[USD, CHF]EUR-CHF has corrected to the low 1.10s after logging a 10-month high at 1.1061 on Tuesday. The cross remains about 1.5% up on levels prevailing in late June, having gained amid a broader bid in the euro following a batch of signals from ECB policymakers that have collectively affirmed that policy tapering is on the table. The policy shift will be welcome by Swiss policymakers after Switzerland's inflation dipped to just 0.2% y/y in June data, down from 0.5% in May and threatening a return of deflation. The price data would have rekindled the SNB's desire for a weaker franc, having stressed at its June policy review that the currency remains "significantly" overvalued.

[USD, CAD]USD-CAD is pausing for breath in the mid 1.27s after diving sharply to a 13-month low at 1.2680 on Wednesday following yesterday's BoC rate hike. While markets were mostly braced for a hike, they were not fully anticipating a move as soon as this week. The low is the culmination of a two-month bear phase, over which time the Canadian economy has showed consistent signs of improvement while BoC policymakers have been expressing the view that the drag from the oil-related shock in recent years has now passed. We take a neutral view of USD-CAD for now. The Canadian calendar is pretty much empty until next week, while U.S. CPI data today is likely to show inflation dipping to 1.5% from 1.9%.